Payments Perspectives Blog

Oi and Farewell (to Mag Stripe)

One of the top-line lessons of the MasterCard Mobile Payments Readiness Index (MPRI) is the great differences that obtain globally from one market to the next. The 34 countries the Index examines are like snowflakes: the local conditions are simply too different in 34 separate cases to permit prescribing a simple and unitary mobile rollout plan for any two.

At the same time, the different conditions are comprised of the same elements: smart phones, cell grids, issuers, acquirers, networks and acceptance devices—and platforms.

That thought occurred last week at CMEP, the big Brazil mobile payments congress your agent keynoted last week. Right next to the MasterCard booth was that of Oi Paggo, the joint venture between mobile operator Oi (“oi” is what you say when you answer the phone in Brazil, and it translates as “hi”) and issuer Banco do Brasil. This joint venture worked hand in hand with one of the leading Brazil acquirers: Cielo.

The MPRI team had its eye on Oi Paggo when calculating the Mobile Commerce Cluster (MCC) for Brazil. The MCC measures integration, and Oi Paggo is a signal example of just that.

Most attention globally has focused on Oi Paggo’s SMS P2P payments functionality, and Insights got a demo from Paggo president and CEO Massayuki Fujimoto on the show floor of that product. But just as important was the physical world payment capability, because the physical world, what the Index calls POS payments, is where the volume is: Paggo permits an Oi smart phone to make a payment to any EMV-equipped acceptance terminal, of which Cielo operates about 1.8 million in Brazil at about a million merchants.

That got me thinking about how different Brazil is from other markets, like the U.S., for example. While conditions on the ground in the U.S. are of course quite different from those in Brazil, it’s also the case that there’s a major initiative afoot from MasterCard and others (finally!) to bring EMV to the U.S. And how much longer after that before U.S. merchants could easily accept payments at the point of sale from a mobile phone with little more than the software download that Cielo requires at POS of its Oi Paggo customers? The question answers itself: sooner than you’d think.